Providing American startups with access to international funding
Capitalizing on the worldwide expansion in the technology and SaaS sector, U.S. startup incubators and venture capital firms have recently started investing in offshore startups all over the world. The portfolios of top seed incubators, including 500 Startups, have long since been enlarged to encompass regions like Latin America and South Asia. According to their justification, it’s crucial to search outside of Silicon Valley for prospective businesses because the region has grown overly saturated with venture funding alternatives for startup founders.
Instead of viewing this trend as a problem, American company founders can view it as an opportunity because it gives them a way to approach foreign partners and venture capitalists (VCs) from markets like the Middle East or Europe for funding options. These days, getting money in the beginning is much simpler because to the existence of startup hubs in all major cities. However, contacting overseas seed investors can be a wonderful strategic move for gaining visibility abroad. In order to gain international traction, it might be quite beneficial to look for relationships with foreign VCs, Angels, and startup middlemen.
Ever since the Startup America initiative, which was established to promote high-growth technological entrepreneurship across the U.S., was introduced there has been a considerable increase in venture investment for American businesses. The amount invested in American businesses by local and foreign VCs in 2014 was $48.3 billion, the most since 2000. International investors are starting to become increasingly keen on profiting from this development. The Chinese internet giant Baidu’s investment in the San Francisco-based Uber is a prime illustration. Entrepreneurs can now readily connect with and pitch to foreign venture capitalists thanks to the growing popularity of startup networking sites like Founder Dating and Angel List which enables them to advertise a fantastic product and support their pitch with statistics on the growth rate of tech startups in the U.S.
Additionally, looking for collaborations with offshore VCs might be a great approach for establishing a foothold in each of those regions for future market entry. To do this, create hybrid onshore-offshore teams early in the talent acquisition process. The offshore skills can then be used to obtain market intelligence about regional local investors. However, each area has a unique attitude and may view your startup concept differently. While cities like Berlin and Eindhoven would be more open to adopt consumer-focused companies, the Asia-Pacific and the Middle East areas would be more interested in high-tech disruptive B2B solutions. Additionally, there would be large differences between investment criteria and equity distribution characteristics, and you could readily obtain that kind of information from on-ground partners.
Starting with strong offshore partnerships can eventually result in international growth and investment rounds from local investors in those offshore locations. As a result, offshore contacts must be prioritized by startup owners as a key to foreign finance and worldwide expansion.